Aliant cites increased wireless usage as reason to forebear local telephony

Atlantic Canada’s incumbent telco cites increased substitution of local residential telephony by wireless and the growing trend to wireless-only homes as two reasons why the CRTC should forbear its local wireline services from regulation. Aliant Telecom Inc. filed a Part VII application with the commission on April 7 arguing that, due to substantial competition from cableco EastLink, increased usage of wireless, and the growing use of the Internet for making phone calls, its local residential wireline services shouldn’t be regulated. Aliant writes in its application that the commission must broaden its scope of the relevant product market definition in order to fully understand the impact of new and emerging technologies on traditional local wireline communications. "Data services such as instant messaging among PC users and short text messaging between wireless subscribers, are reducing the usage of local wireline services. Wireless voice services are having an even greater effect, while VoIP services, albeit still relatively new, promise more dramatic changes," the company argues as reasons that the CRTC must include wireless, text-messaging and VoIP in the definition of the relevant product market. "Technology has given customers more communications options and will continue to do so. In response, customers are re-defining communications markets. Again, ten years ago, few customers would have considered wireless as a substitute for the wireline local services they received from the telephone company. Prices were considerably higher than they are today and much higher than for wireline local service. Since then, prices for wireless service have fallen substantially, while wireline local prices have risen." Citing an October 2003 Decima Research Inc. and Bell Canada survey (RoW, Oct. 21/03) on telecommunications trends, Aliant writes: "36% of respondents who own or use a wireless phone said that the devices have reduced their usage of wireline telephony. The survey found that 80% of the calls made on wireless devices were made outside the home. This means that 20% of calls using wireless devices are made or received within the home instead of using wireline telephones. In the Atlantic regions, respondents indicated that 90% of their cellular calling time was spent on local calls." The Atlantic telco also notes that a 2002 survey conducted by The Yankee Group found that 26% of minutes have already migrated from wireline to wireless. The survey contends that 45% of mobile users are substituting and that wireless calling will surpass wireline calling by 2006. Aliant isn’t the only incumbent carrier saying increased use of wireless communications is biting into usage of local wireline networks. Earlier this month, Bell released a survey of network usage in Ontario and Quebec that indicates that a significant amount of local voice traffic is traveling over networks other than the company’s local wireline network. The study, Analysis of Local Residential Voice Network Usage, asserts that 20% of local telephony is traveling on Bell’s competitors’ networks. Bell finds that 88.6% of local residential voice traffic is carried over wireline networks, both its own and those of its competitors. Bell’s wireline voice networks accounted for 79.7% of the total local residential wireline and wireless network usage in Ontario and Quebec, which jumps to 90% when wireless is excluded. Bell’s share of total wireless network usage is 39.5%. The numbers are drawn from a sample of 22,000 telephone lines to estimate total weekly usage, and Bell says the relative error associated with its sample is +/- 0.1%, 19 times out of 20. Highlighting the wireless-only impact, Aliant quotes figures from Statistics Canada and the Federal Communications Commission (FCC) on the levels of wireless-only residences. As of May 2003, StatsCan estimates that 2% of Canadian homes are wireless only and the FCC says this figure was 2% as of June 2002. The telco, while not explicitly saying the future impact of wireless-only is real, cites figures released by Microcell Telecommunications Inc. relating to its CityFido wireline replacement program in the British Columbia lower mainland. Microcell signed up 72,000 subscribers to CityFido less than three months after it launched the program (RoW, Oct. 7/03). Quoting yet another Yankee Group study, Aliant notes that younger people have indicated their desire to replace their landline. The 2003 Mobile User Young Adult Survey found that "a significant number of 18-24 year olds have replaced, or in the near future will replace, their landline phone with wireless devices (RoW, Aug. 26/03). Of those who have already migrated to wireless, 12% are from the 18-24 age category, while less than 4% are older than 24. For those who have not yet migrated, 28% plan to do so over the next five years." Aliant highlights a December 2003 report released by Technology Futures Inc., which describes the impact of alternative technologies on traditional wireline network usage. "To forecast the impact of wireless and broadband on wireline primary access lines, we take the FCC wireless figure of 1.2% (i.e. as of November 2001, the percentage of U.S. households with wireless service only) as a starting point. Assuming a typical substitution model, we forecast that, in 2006, 20% of households will rely on wireless (and/or broadband) alone for voice services, and the figure could approach 50% by 2010."

Aliant cites increased wireless usage as reason to forebear local telephony

News | April 21, 2004

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